LiteBlue.USPS.Gov – Whether you are just beginning a career with the Federal government or you are a veteran employee with decades of service, it is important that you review the benefits you have as a Federal government employee. Using the US Office of Personnel Management, Federal employees can access a number of resources to assist in gathering information and an understanding pertaining to important benefit topics. This article will elaborate on two specific Federal employee benefits: Life insurance and Disability insurance.LiteBlue.USPS.Gov
FEGLI Term Life Insurance
Administered through the Office of Personnel Management, FEGLI is currently the largest group life insurance program in the world. It provides Federal government and Postal employees with an optional Term Life insurance program, from which 4 benefit types can be elected:
- BIA (Basic Insurance Amount): This is the most common benefit available, covering 1 times your annual income. The premiums for this benefit option are split between you(2/3) and your employer (1/3), and are on a non-guaranteed level premium schedule.
- Option A (Standard): This is the most basic benefit available on an optional basis. It provides employees with an additional $10,000 death benefit and is paid for entirely by each employee.
- Option B (Additional): This option is where Federal and Postal employees can truly expand on the level of life insurance they have through the FEGLI program. This option allows for employees to elect an additional benefit, up to 5 times his/her annual income. Like all optional FEGLI benefits, the cost is 100% paid for by you.
- Option C (Family): As its name implies, this option allows Federal employees to elect additional life insurance for their spouse and children. This coverage is offered in multiples, allowing a maximum benefit of $25,000 for a spouse and $12,500 for each child.
LiteBlue.USPS.Gov – Simply put, the benefits provided through FEGLI can be great. Provided you elect these options during an open enrollment period or a qualified life-changing event, there is no medical underwriting required. This can be a tremendous advantage for those who otherwise would not qualify. Specifically for young professionals, the FEGLI program can be a very inexpensive way of maintaining protection.
For many Federal employees however, this coverage will also present some limitations and concerns. Many Federal employees would not adequately be protected with only 5 times their annual income in life insurance, so some supplemental amount of individual life insurance may be needed. Additionally, due to the increasing premium schedule for options A, B and C, many Federal employees could save considerably by owning an individual Term Life policy instead.LiteBlue.USPS.Gov
FERS Disability Insurance
Surprisingly, many Federal employees are not even aware of the fact that a long-term disability insurance benefit exists. For all Federal employees under FERS, there is an early retirement option available specifically for disability. Considering that a disability is more likely to occur than premature death and most people rely on their paycheck, this is a critical benefit to review.LiteBlue.USPS.Gov
The FERS disability program is governed by a set of eligibility guidelines and benefit payment schedules. Similar to many group long-term disability insurance plans, the amount of benefit you receive is based on a percentage of your income. Without getting too far into detail, below is an explanation of the disability benefit computation for Federal employees under age 62 and not eligible for immediate voluntary retirement:
- For the first 12 months: 60% of your high-3 average salary minus 100% of your Social Security benefit for any month in which you are entitled to Social Security benefits.
- Beyond the first 12 months 40% of your high-3 average salary minus 60% of your Social Security benefit for any month in which you are entitled to Social Security disability benefits.
In reality, these benefits are calculated fairly similar to most group disability insurance programs, except that most plans do not reduce to 40% in year 2. Similarly, although FERS disability benefits provides a fair amount of income protection for you, because of the way benefits are taxed and reduced in year 2, it may not be an adequate amount of coverage, depending on your personal circumstances.LiteBlue.USPS.Gov
For those who cannot survive on 60% or 40% income replacement, there are individual options available to increase your coverage. Through privately owned supplemental disability insurance, Federal employees can increase their coverage to more appropriately protect their income and families.
To learn more about your options and review details regarding FERS disability insurance and FEGLI life insurance, visit FERS disability insurance for Federal employees and FEGLI life insurance for federal employees.
Michael is the owner of M.R Insurance Consultants, an insurance & financial services firm based in Rockville, MD. His firm has worked with many Federal Government employees regarding their life and disability insurance, by reviewing existing coverage through FEGLI & FERS and implementing plans to more adequately protect their loved ones while saving money in many cases. The can be contacted at 800-817-4522.LiteBlue.USPS.Gov